Don’t Forget What Europe Is All About!

“If this is Europe, forget it“. With these words Matteo Renzi shamed his colleagues at the European Council meeting last week. I understand his frustration. After inhumanly treating refugees in the Mediterranean Sea, we now witness the breakdown of the Euro talks. But we must not forget what Europe stands for.

I have never been a friend of Mrs. Merkel’s European policies. Her austerity drive has caused more damage than done good. But now the Syriza government has become the biggest threat to renewed growth, job creation, economic prosperity, political integration and peace in Europe. Merkel has charged the gun, Tsipras has pulled the trigger.

Austerity was a mistake and has caused enormous suffering. A reduction of one third of GDP income hurts, and it hurts the poor more than the rich. Greece needs help. Help against the ayatollahs in Berlin and help against the demons in Athens. Few people doubt Greece’s need to set up an efficient state, capable of collecting taxes and creating employment based on merit and not on corruption. Yet, while such reforms take time, the Greek economy will only return to growth if money is spent now, not if money is saved. That ought to be self-evident. But it also ought to be clear that pacta sunt servanda, that one cannot bite the hand that is supposed to help. Destroying trust was Merkel’s greatest mistake in the early phase of the Euro crisis; today Tsipras is committing a crime against history by pushing the Euro into the abyss.

Despite enormous resistance, Commission President Jean-Claude Junker has managed to offer the Greeks a regional aid program worth €35bn out of the EU’s structural funds, against a moderately targeted structural budget surplus of only 1 percent. One may argue that such a surplus was premature, but it is less than a third than what the previous government was in the process of achieving. The final haggling failed over an amount of €400 million. Is that worth destroying Europe for?

The only answer to the question why the talks failed is that Alexis Tsipras never wanted to stay in the Euro area. The extreme left in Europe has a long history of rejecting money. Money serves the haves and not the have-nots. If Marx and Lenin were right to abolish money as we know it, the Euro must be wrong. But the story is more complex. Modern money is created by contracts. It is credit. Without debt there is no money (please tell Mrs. Merkel!). But contracts are mutual promises by which both parties voluntarily oblige themselves.

Haggling over the terms is a sign of freedom, but once they are agreed, the obligation is binding. This is what makes a modern state, a modern economy; this is the foundation of the rule of law and human rights. The creditors have therefore a moral right to be paid, and if the debtor cannot pay a new agreement is needed. Yet, instead of negotiating, Tsipras appeals to nationalistic and chauvinist rhetoric of pride and honour to justify the expropriation of creditors. If Lenin could rob Russian bondholders, why shouldn’t we rob European taxpayers? My hunch (or hope) is that Greek citizens are more mature and have learned from the failures of history. Why should they be proud of their failing state?

The Syriza government has proven the simple fact that one cannot change policies in Europe by national elections. Democracy is not demoi-cracy, i.e. the rule by the people, for the people through the people cannot be the rule by peoples. What defines the people is that they all collectively own public goods. All together. Equally. The Euro belongs to all of us in the Euro area. It is part of our European res publica, and as such it must be administered by the general will of all European citizens.

In a democracy, this will is expressed by universal suffrage in general elections, where every citizen’s vote counts equally. In a European democracy all citizens together ought to be able to choose if they want austerity or not and their common government must decide how to help national governments. A proper European government would also be able to implement reforms which failed state governments are incapable of. This is probably why so many Greek citizens, despite all the hardship, still wish to remain in Europe. Who would trust the national elites?

The alternatives are clear. Either we go back to the warring states in Europe, proclaim “chacun pour soi” and disintegrate Europe, with the effect that Germany will dominate the continent, or we move forward to an ever more united Europe, where the citizens appoint a common government to manage their common concerns. A Europe, where citizens are the owners of their common goods and not governments. In short, we must draw the conclusion from what we already are: a European Republic.

It is time to rise beyond the past. The first step on the way out of the crisis is a solid vote in favour of YES at the Greek referendum. But the second step must follow immediately: set up a European government with the power to overcome the divisions and manage what we all have in common. This is what the European Union stands for and this is what we must not forget.

About Stefan Collignon

Stefan Collignon is Professor of Political Economy at St. Anna School of Advanced Studies, Pisa and President of the Scientific Committee of Centro Europa Ricerche (CER), Rome. He was also Centennial Professor of European Political Economy at the London School of Economics and Political Science (LSE) and Visiting Professor at Harvard University. Apart from his column for Social Europe Journal, Stefan publishes regularly in newspapers such as The Financial Times and The Financial Times Germany.

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